The U.S. cattle market should remain relatively strong for 2013 and average 4 to 8 percent higher than in 2012, according to Walt Prevatt, Auburn University Extension economist.

“As should be expected, the 2013 cattle market has the potential for some big price swings,” says Prevatt in his annual U.S. beef cattle situation and price outlook.

Abrupt changes in one of several factors could add a lot of volatility to cattle market prices, he says. “Cattle farmers will need to search for ways to lower their unit cost of production and ways to enhance market prices in order to achieve profitability during 2013,” he says.

Factors to watch next year, says Prevatt, include the current weak U.S. economy, high levels of unemployment, lack of consumer confidence, political gridlock and chaos at all levels of government, and other issues.

“There is little wonder why future economic uncertainty is fresh in the minds of many U.S. citizens,” he says. “The decisions made on these issues are believed to have an overwhelming effect on business and consumer spending and our future prosperity. Unfortunately, there is not convincing evidence about what the future holds.

“Consumers, at least for right now, are spending less and saving more. Only time will tell if this may be the start of a longer term shift in consumer behavior.”

U.S. beef demand has felt some challenges the last three years due to high unemployment and tightening consumer grocery budgets, says Prevatt.

“Domestic beef demand is expected to be further tested during 2013 as consumers continue to experience rising prices for most goods and services.

“If consumer disposable income does not rise proportionally, shopping habits and choices will shift as prices rise, forcing consumers to substitute and/or reduce the bundle of goods and services they consume. The weak U.S. economy during 2012 has limited domestic beef demand growth,” he says.

Per capita consumption of beef is expected to decline during 2012 and 2013, he adds.

“Beef production during 2012 is expected to be 25.8 billion pounds, down 0.4 billion pounds or —1.6 percent from a year ago. Beef imports for 2012 are estimated to be 2.4 billion pounds or up about 349 million pounds (17 percent) from 2011.”